[Federal Register Volume 66, Number 250 (Monday, December 31, 2001)]
[Rules and Regulations]
[Pages 67680-67684]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-31846]



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Part VI





Department of the Treasury





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Internal Revenue Service



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26 CFR Part 1

31 CFR Part 103



Financial Crimes Enforcement Network; Amendment to the Bank Secrecy Act 
Regulations--Requirement that Nonfinancial Trades or Businesses Report 
Certain Currency Transactions; Interim Rule, Final and Proposed Rules

  Federal Register / Vol. 66, No. 250 / Monday, December 31, 2001 / 
Rules and Regulations  

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DEPARTMENT OF THE TREASURY

31 CFR Part 103

RIN 1506-AA25


Financial Crimes Enforcement Network; Amendment to the Bank 
Secrecy Act Regulations--Requirement That Nonfinancial Trades or 
Businesses Report Certain Currency Transactions

AGENCY: Financial Crimes Enforcement Network (``FinCEN''), Treasury.

ACTION: Interim rule.

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SUMMARY: This document contains an interim rule amending the Bank 
Secrecy Act regulations to require that persons who, in the course of 
conducting a nonfinancial trade or business, receive more than $10,000 
in coins or currency in one transaction (or two or more related 
transactions), file a report of such transaction with the Treasury 
Department.

DATES: This interim rule is effective as of January 1, 2002.

FOR FURTHER INFORMATION CONTACT: Cynthia L. Clark, Deputy Chief 
Counsel, or Laurence J. Levine, Attorney-Advisor, Office of Chief 
Counsel, FinCEN, (703) 905-3590.

SUPPLEMENTARY INFORMATION:

I. Introduction

    This document adds, as an interim rule, a new section 31 CFR 
103.30. The Interim Rule is adopted to implement the terms of 31 U.S.C. 
5331, which was added to the Bank Secrecy Act by section 365 of the 
Uniting and Strengthening America by Providing Appropriate Tools 
Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, 
Public Law 107-56 (October 26, 2001).

II. Statutory Provisions

    The Bank Secrecy Act, Titles I and II of Public Law 91-508, as 
amended, codified at 12 U.S.C. 1829b, 12 U.S.C. 1951-1959, and 31 
U.S.C. 5311, et seq., authorizes the Secretary of the Treasury, inter 
alia, to issue regulations requiring financial institutions to keep 
records and file reports that are determined to have a high degree of 
usefulness in criminal, tax, and regulatory matters, or in the conduct 
of intelligence or counter-intelligence activities, to protect against 
international terrorism, and to implement counter-money laundering 
programs and compliance procedures.\1\ Regulations implementing Title 
II of the Bank Secrecy Act (codified at 31 U.S.C. 5311, et seq.), 
appear at 31 CFR Part 103. The authority of the Secretary to administer 
Title II of the Bank Secrecy Act has been delegated to the Director of 
FinCEN.
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    \1\ Language expanding the scope of the Bank Secrecy Act to 
intelligence or counter-intelligence activities to protect against 
international terrorism was added by Section 358 of the USA PATRIOT 
Act of 2001.
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    Under 31 U.S.C. 5331, any person who is engaged in a trade or 
business and who, in the course of such trade or business, receives 
more than $10,000 in coins or currency in one transaction (or two or 
more related transactions) is required to file a report with respect to 
such transaction (or related transactions) with the Treasury 
Department. Reporting under section 5331 does not apply to amounts 
received in a transaction reported under 31 U.S.C. 5313 and the 
accompanying regulations.
    For purposes of section 5331, currency includes foreign currency, 
and to the extent provided in regulations, any monetary instrument, 
whether or not in bearer form, with a face amount of not more than 
$10,000. Such monetary instruments shall not include any check drawn on 
the account of the writer in a financial institution referred to in 
subparagraph (A), (B), (C), (D), (E), (F), (G), (J), (K), (R), or (S) 
of 31 U.S.C. 5312 (a)(2).
    Reports required under section 5331 must be in such form as the 
Secretary may prescribe. The reports must contain: (1) the name, 
address, and such other identification information as the Secretary may 
require, of the person from whom the coins or currency was received; 
(2) the amount of coins or currency received; (3) the date and nature 
of the transaction; and (4) such other information, including the 
identification of the person filing the report, as the Secretary may 
prescribe.

III. Interim Rule

    With a minor exception, section 5331 requires reporting of the same 
transaction that must be reported to the Internal Revenue Service 
(``IRS'') under section 6050I of title 26, United States Code, and 26 
CFR 1.6050I-1. Section 5331 does not require reporting of currency 
received by clerks of court. Cf. 26 U.S.C. 6050I(g). Further, section 
5331 does not require the person making a report under section 5331 to 
furnish to the person whose name is required to be set forth on the 
report a statement concerning the report. Cf. 26 U.S.C. 6050I(e).
    Because section 5331 is substantially similar to 26 U.S.C. 6050I, 
the Interim Rule provides that persons required to report a transaction 
under section 5331 must make that report by filing a joint FinCEN/IRS 
form with the IRS. Under this dual-reporting regime, only one form is 
required to be filed for a transaction subject to both section 5331 and 
section 6050I of title 26. Thus, the Interim Rule imposes no new 
reporting or record-keeping burden on persons required to report 
certain transactions under section 5331.
    Because of the similarity between the provisions, FinCEN believes 
it is appropriate for the Interim Rule to adopt the same rules for 
multiple payments, monetary instruments, and designated reporting 
transactions as appear in the regulations under section 6050I. Thus, 
for example, the Interim Rule requires that recipients aggregate an 
initial payment and subsequent payments such that a report is required 
if the aggregation exceeds $10,000 within one year of the initial 
payment. In addition, the Interim Rule, like 26 CFR 1.6050I-1, includes 
within the definition of currency monetary instruments such as 
cashiers' checks, bank drafts, traveler's checks or money orders, not 
having a face amount of more than $10,000, when such monetary 
instruments are received in a ``designated reporting transaction,'' 
i.e., certain retail sales as defined in the regulation.

IV. Regulatory Flexibility Act

    The provisions of the Regulatory Flexibility Act relating to 
initial and final regulatory flexibility analysis (5 U.S.C. 604) are 
not applicable to this Interim Rule because FinCEN was not required to 
publish a notice of proposed rulemaking under 5 U.S.C. 553 or any other 
law.

V. Paperwork Reduction Act

    This regulation is being issued without prior notice and public 
procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553). 
For this reason, the collection of information contained in this 
regulation has been reviewed under the requirements of the Paperwork 
Reduction Act (44 U.S.C. 3507(j)) and approved by the Office of 
Management and Budget (OMB) under control number 1506-0018. An agency 
may not conduct or sponsor, and a person is not required to respond to, 
a collection of information unless it displays a valid control number 
assigned by OMB.
    To submit comments concerning the collection of information 
described in this Interim Rule, please refer to the companion Notice of 
Proposed Rulemaking published elsewhere in this issue of the Federal 
Register.

[[Page 67681]]

VI. Executive Order 12866

    The Department of the Treasury has determined that this Interim 
Rule is not a significant regulatory action under Executive Order 
12866.

VII. Unfunded Mandates Act of 1995 Statement

    Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law 
104-4 (Unfunded Mandates Act), March 22, 1995, requires that an agency 
prepare a budgetary impact statement before promulgating a rule that 
includes a federal mandate that may result in expenditure by state, 
local, and tribal governments, in the aggregate, or by the private 
sector, of $100 million or more in any one year. If a budgetary impact 
statement is required, section 202 of the Unfunded Mandates Act also 
requires an agency to identify and consider a reasonable number of 
regulatory alternatives before promulgating a rule. FinCEN has 
determined that it is not required to prepare a written statement under 
section 202 and has concluded that on balance this proposal provides 
the most cost-effective and least burdensome alternative to achieve the 
objectives of the rule.

VIII. Administrative Procedure Act

    Because the Interim Rule implements the statute, imposes no 
additional burden on the public, and addresses the collection of 
records that may be integral in ongoing antiterrorism and other 
criminal and regulatory investigations or proceedings, it is found to 
be impracticable, unnecessary, and contrary to the public interest to 
comply with notice and public procedure under 5 U.S.C. 553(b). For 
these reasons, the Interim Rule is made effective before 30 days have 
passed after its publication date. See 5 U.S.C. 553(d).

List of Subjects in 31 CFR Part 103

    Authority delegations (Government agencies), Banks and banking, 
Currency, Investigations, Law enforcement, Reporting and recordkeeping 
requirements.

Amendments to the Regulations

    For the reasons set forth above in the preamble, 31 CFR Part 103 is 
amended as follows:

PART 103--FINANCIAL RECORDKEEPING AND REPORTING OF CURRENCY AND 
FOREIGN TRANSACTIONS

    1. The authority citation for part 103 is revised to read as 
follows:

    Authority: 12 U.S.C. 1829b and 1951-1959; 31 U.S.C. 5311-5331.


    2. A new Sec. 103.30 is added to subpart B to read as follows:


Sec. 103.30  Reports relating to currency in excess of $10,000 received 
in a trade or business.

    (a) Reporting requirement--(1) Reportable transactions--(i) In 
general. Any person (solely for purposes of section 5331 of title 31, 
United States Code and this section, ``person'' shall have the same 
meaning as under 26 U.S.C. 7701 (a)(1)) who, in the course of a trade 
or business in which such person is engaged, receives currency in 
excess of $10,000 in 1 transaction (or 2 or more related transactions) 
shall, except as otherwise provided, make a report of information with 
respect to the receipt of currency. This section does not apply to 
amounts received in a transaction reported under 31 U.S.C. 5313 and 
Sec. 103.22.
    (ii) Certain financial transactions. Section 6050I of title 26 of 
the United States Code requires persons to report information about 
financial transactions to the IRS, and 31 U.S.C. 5331 requires persons 
to report similar information about certain transactions to the 
Financial Crimes Enforcement Network. This information shall be 
reported on the same form as prescribed by the Secretary.
    (2) Currency received for the account of another. Currency in 
excess of $10,000 received by a person for the account of another must 
be reported under this section. Thus, for example, a person who 
collects delinquent accounts receivable for an automobile dealer must 
report with respect to the receipt of currency in excess of $10,000 
from the collection of a particular account even though the proceeds of 
the collection are credited to the account of the automobile dealer 
(i.e., where the rights to the proceeds from the account are retained 
by the automobile dealer and the collection is made on a fee-for-
service basis).
    (3) Currency received by agents--(i) General rule. Except as 
provided in paragraph (a)(3)(ii) of this section, a person who in the 
course of a trade or business acts as an agent (or in some other 
similar capacity) and receives currency in excess of $10,000 from a 
principal must report the receipt of currency under this section.
    (ii) Exception. An agent who receives currency from a principal and 
uses all of the currency within 15 days in a currency transaction (the 
``second currency transaction'') which is reportable under section 5312 
of title 31, or 31 U.S.C. 5331 and this section, and who discloses the 
name, address, and taxpayer identification number of the principal to 
the recipient in the second currency transaction need not report the 
initial receipt of currency under this section. An agent will be deemed 
to have met the disclosure requirements of this paragraph (a)(3)(ii) if 
the agent discloses only the name of the principal and the agent knows 
that the recipient has the principal's address and taxpayer 
identification number.
    (iii) Example. The following example illustrates the application of 
the rules in paragraphs (a)(3)(i) and (ii) of this section:

    Example. B, the principal, gives D, an attorney, $75,000 in 
currency to purchase real property on behalf of B. Within 15 days D 
purchases real property for currency from E, a real estate 
developer, and discloses to E, B's name, address, and taxpayer 
identification number. Because the transaction qualifies for the 
exception provided in paragraph (a)(3)(ii) of this section, D need 
not report with respect to the initial receipt of currency under 
this section. The exception does not apply, however, if D pays E by 
means other than currency, or effects the purchase more than 15 days 
following receipt of the currency from B, or fails to disclose B's 
name, address, and taxpayer identification number (assuming D does 
not know that E already has B's address and taxpayer identification 
number), or purchases the property from a person whose sale of the 
property is not in the course of that person's trade or business. In 
any such case, D is required to report the receipt of currency from 
B under this section.

    (b) Multiple payments. The receipt of multiple currency deposits or 
currency installment payments (or other similar payments or 
prepayments) relating to a single transaction (or two or more related 
transactions), is reported as set forth in paragraphs (b)(1) through 
(b)(3) of this section.
    (1) Initial payment in excess of $10,000. If the initial payment 
exceeds $10,000, the recipient must report the initial payment within 
15 days of its receipt.
    (2) Initial payment of $10,000 or less. If the initial payment does 
not exceed $10,000, the recipient must aggregate the initial payment 
and subsequent payments made within one year of the initial payment 
until the aggregate amount exceeds $10,000, and report with respect to 
the aggregate amount within 15 days after receiving the payment that 
causes the aggregate amount to exceed $10,000.
    (3) Subsequent payments. In addition to any other required report, 
a report must be made each time that previously unreportable payments 
made within a 12-month period with respect to a single transaction (or 
two or more related transactions), individually or in the

[[Page 67682]]

aggregate, exceed $10,000. The report must be made within 15 days after 
receiving the payment in excess of $10,000 or the payment that causes 
the aggregate amount received in the 12-month period to exceed $10,000. 
(If more than one report would otherwise be required for multiple 
currency payments within a 15-day period that relate to a single 
transaction (or two or more related transactions), the recipient may 
make a single combined report with respect to the payments. The 
combined report must be made no later than the date by which the first 
of the separate reports would otherwise be required to be made.)
    (4) Example. The following example illustrates the application of 
the rules in paragraphs (b)(1) through (b)(3) of this section:

    Example. On January 10, Year 1, M receives an initial payment in 
currency of $11,000 with respect to a transaction. M receives 
subsequent payments in currency with respect to the same transaction 
of $4,000 on February 15, Year 1, $6,000 on March 20, Year 1, and 
$12,000 on May 15, Year 1. M must make a report with respect to the 
payment received on January 10, Year 1, by January 25, Year 1. M 
must also make a report with respect to the payments totaling 
$22,000 received from February 15, Year 1, through May 15, Year 1. 
This report must be made by May 30, Year 1, that is, within 15 days 
of the date that the subsequent payments, all of which were received 
within a 12-month period, exceeded $10,000.

    (c) Meaning of terms. The following definitions apply for purposes 
of this section--
    (1) Currency. Solely for purposes of 31 U.S.C. 5331 and this 
section, currency means--
    (i) The coin and currency of the United States or of any other 
country, which circulate in and are customarily used and accepted as 
money in the country in which issued; and
    (ii) A cashier's check (by whatever name called, including 
``treasurer's check'' and ``bank check''), bank draft, traveler's 
check, or money order having a face amount of not more than $10,000--
    (A) Received in a designated reporting transaction as defined in 
paragraph (c)(2) of this section (except as provided in paragraphs 
(c)(3), (4), and (5) of this section), or
    (B) Received in any transaction in which the recipient knows that 
such instrument is being used in an attempt to avoid the reporting of 
the transaction under section 5331 and this section.
    (2) Designated reporting transaction. A designated reporting 
transaction is a retail sale (or the receipt of funds by a broker or 
other intermediary in connection with a retail sale) of--
    (i) A consumer durable, (ii) A collectible, or
    (iii) A travel or entertainment activity.
    (3) Exception for certain loans. A cashier's check, bank draft, 
traveler's check, or money order received in a designated reporting 
transaction is not treated as currency pursuant to paragraph 
(c)(1)(ii)(A) of this section if the instrument constitutes the 
proceeds of a loan from a bank. The recipient may rely on a copy of the 
loan document, a written statement from the bank, or similar 
documentation (such as a written lien instruction from the issuer of 
the instrument) to substantiate that the instrument constitutes loan 
proceeds.
    (4) Exception for certain installment sales. A cashier's check, 
bank draft, traveler's check, or money order received in a designated 
reporting transaction is not treated as currency pursuant to paragraph 
(c)(1)(ii)(A) of this section if the instrument is received in payment 
on a promissory note or an installment sales contract (including a 
lease that is considered to be a sale for Federal income tax purposes). 
However, the preceding sentence applies only if--
    (i) Promissory notes or installment sales contracts with the same 
or substantially similar terms are used in the ordinary course of the 
recipient's trade or business in connection with sales to ultimate 
consumers; and
    (ii) The total amount of payments with respect to the sale that are 
received on or before the 60th day after the date of the sale does not 
exceed 50 percent of the purchase price of the sale.
    (5) Exception for certain down payment plans. A cashier's check, 
bank draft, traveler's check, or money order received in a designated 
reporting transaction is not treated as currency pursuant to paragraph 
(c)(1)(ii)(A) of this section if the instrument is received pursuant to 
a payment plan requiring one or more down payments and the payment of 
the balance of the purchase price by a date no later than the date of 
the sale (in the case of an item of travel or entertainment, a date no 
later than the earliest date that any item of travel or entertainment 
pertaining to the same trip or event is furnished). However, the 
preceding sentence applies only if--
    (i) The recipient uses payment plans with the same or substantially 
similar terms in the ordinary course of its trade or business in 
connection with sales to ultimate consumers; and
    (ii) The instrument is received more than 60 days prior to the date 
of the sale (in the case of an item of travel or entertainment, the 
date on which the final payment is due).
    (6) Examples. The following examples illustrate the definition of 
``currency'' set forth in paragraphs (c)(l) through (c)(5) of this 
section:

    Example 1.  D, an individual, purchases gold coins from M, a 
coin dealer, for $13,200. D tenders to M in payment United States 
currency in the amount of $6,200 and a cashier's check in the face 
amount of $7,000 which D had purchased. Because the sale is a 
designated reporting transaction, the cashier's check is treated as 
currency for purposes of 31 U.S.C. 5331 and this section. Therefore, 
because M has received more than $10,000 in currency with respect to 
the transaction, M must make the report required by 31 U.S.C. 5331 
and this section.
    Example 2. E, an individual, purchases an automobile from Q, an 
automobile dealer, for $11,500. E tenders to Q in payment United 
States currency in the amount of $2,000 and a cashier's check 
payable to E and Q in the amount of $9,500. The cashier's check 
constitutes the proceeds of a loan from the bank issuing the check. 
The origin of the proceeds is evident from provisions inserted by 
the bank on the check that instruct the dealer to cause a lien to be 
placed on the vehicle as security for the loan. The sale of the 
automobile is a designated reporting transaction. However, under 
paragraph (c)(3) of this section, because E has furnished Q 
documentary information establishing that the cashier's check 
constitutes the proceeds of a loan from the bank issuing the check, 
the cashier's check is not treated as currency pursuant to paragraph 
(c)(1)(ii)(A) of this section.
    Example 3. F, an individual, purchases an item of jewelry from 
S, a retail jeweler, for $12,000. F gives S traveler's checks 
totaling $2,400 and pays the balance with a personal check payable 
to S in the amount of $9,600. Because the sale is a designated 
reporting transaction, the traveler's checks are treated as currency 
for purposes of section 5331 and this section. However, because the 
personal check is not treated as currency for purposes of section 
5331 and this section, S has not received more than $10,000 in 
currency in the transaction and no report is required to be filed 
under section 5331 and this section.
    Example 4. G, an individual, purchases a boat from T, a boat 
dealer, for $16,500. G pays T with a cashier's check payable to T in 
the amount of $16,500. The cashier's check is not treated as 
currency because the face amount of the check is more than $10,000. 
Thus, no report is required to be made by T under section 5331 and 
this section.
    Example 5. H, an individual, arranges with W, a travel agent, 
for the chartering of a passenger aircraft to transport a group of 
individuals to a sports event in another city. H also arranges with 
W for hotel accommodations for the group and for admission tickets 
to the sports event. In payment, H tenders to W money orders which H 
had previously purchased. The total amount of the money orders, none 
of which individually exceeds $10,000 in face amount, exceeds 
$10,000. Because the transaction is a designated reporting 
transaction, the money orders are treated as currency for purposes 
of

[[Page 67683]]

section 5331 and this section. Therefore, because W has received 
more than $10,000 in currency with respect to the transaction, W 
must make the report required by section 5331 and this section.

    (7) Consumer durable. The term consumer durable means an item of 
tangible personal property of a type that is suitable under ordinary 
usage for personal consumption or use, that can reasonably be expected 
to be useful for at least 1 year under ordinary usage, and that has a 
sales price of more than $10,000. Thus, for example, a $20,000 
automobile is a consumer durable (whether or not it is sold for 
business use), but a $20,000 dump truck or a $20,000 factory machine is 
not.
    (8) Collectible. The term collectible means an item described in 
paragraphs (A) through (D) of section 408 (m)(2) of title 26 of the 
United States Code (determined without regard to section 408 (m)(3) of 
title 26 of the United States Code).
    (9) Travel or entertainment activity. The term travel or 
entertainment activity means an item of travel or entertainment (within 
the meaning of 26 CFR 1.274-2(b)(1)) pertaining to a single trip or 
event where the aggregate sales price of the item and all other items 
pertaining to the same trip or event that are sold in the same 
transaction (or related transactions) exceeds $10,000.
    (10) Retail sale. The term retail sale means any sale (whether for 
resale or for any other purpose) made in the course of a trade or 
business if that trade or business principally consists of making sales 
to ultimate consumers.
    (11) Trade or business. The term trade or business has the same 
meaning as under section 162 of title 26, United States Code.
    (12) Transaction. (i) Solely for purposes of 31 U.S.C. 5331 and 
this section, the term transaction means the underlying event 
precipitating the payer's transfer of currency to the recipient. In 
this context, transactions include (but are not limited to) a sale of 
goods or services; a sale of real property; a sale of intangible 
property; a rental of real or personal property; an exchange of 
currency for other currency; the establishment or maintenance of or 
contribution to a custodial, trust, or escrow arrangement; a payment of 
a preexisting debt; a conversion of currency to a negotiable 
instrument; a reimbursement for expenses paid; or the making or 
repayment of a loan. A transaction may not be divided into multiple 
transactions in order to avoid reporting under this section.
    (ii) The term related transactions means any transaction conducted 
between a payer (or its agent) and a recipient of currency in a 24-hour 
period. Additionally, transactions conducted between a payer (or its 
agent) and a currency recipient during a period of more than 24 hours 
are related if the recipient knows or has reason to know that each 
transaction is one of a series of connected transactions.
    (iii) The following examples illustrate the definition of 
paragraphs (c)(12) (i) and (ii) of this section:

    Example 1.  A person has a tacit agreement with a gold dealer to 
purchase $36,000 in gold bullion. The $36,000 purchase represents a 
single transaction under paragraph (c)(12)(i) of this section and 
the reporting requirements of this section cannot be avoided by 
recasting the single sales transaction into 4 separate $9,000 sales 
transactions.
    Example 2.  An attorney agrees to represent a client in a 
criminal case with the attorney's fee to be determined on an hourly 
basis. In the first month in which the attorney represents the 
client, the bill for the attorney's services comes to $8,000 which 
the client pays in currency. In the second month in which the 
attorney represents the client, the bill for the attorney's services 
comes to $4,000, which the client again pays in currency. The 
aggregate amount of currency paid ($12,000) relates to a single 
transaction as defined in paragraph (c)(12)(i) of this section, the 
sale of legal services relating to the criminal case, and the 
receipt of currency must be reported under this section.
    Example 3.  A person intends to contribute a total of $45,000 to 
a trust fund, and the trustee of the fund knows or has reason to 
know of that intention. The $45,000 contribution is a single 
transaction under paragraph (c)(12)(i) of this section and the 
reporting requirement of this section cannot be avoided by the 
grantor's making five separate $9,000 contributions of currency to a 
single fund or by making five $9,000 contributions of currency to 
five separate funds administered by a common trustee.
    Example 4. K, an individual, attends a one day auction and 
purchases for currency two items, at a cost of $9,240 and $1,732.50 
respectively (tax and buyer's premium included). Because the 
transactions are related transactions as defined in paragraph 
(c)(12)(ii) of this section, the auction house is required to report 
the aggregate amount of currency received from the related sales 
($10,972.50), even though the auction house accounts separately on 
its books for each item sold and presents the purchaser with 
separate bills for each item purchased.
    Example 5. F, a coin dealer, sells for currency $9,000 worth of 
gold coins to an individual on three successive days. Under 
paragraph (c)(12)(ii) of this section the three $9,000 transactions 
are related transactions aggregating $27,000 if F knows, or has 
reason to know, that each transaction is one of a series of 
connected transactions.

    (13) Recipient. (i) The term recipient means the person receiving 
the currency. Except as provided in paragraph (c)(13)(ii) of this 
section, each store, division, branch, department, headquarters, or 
office (``branch'') (regardless of physical location) comprising a 
portion of a person's trade or business shall for purposes of this 
section be deemed a separate recipient.
    (ii) A branch that receives currency payments will not be deemed a 
separate recipient if the branch (or a central unit linking such branch 
with other branches) would in the ordinary course of business have 
reason to know the identity of payers making currency payments to other 
branches of such person.
    (iii) Examples. The following examples illustrate the application 
of the rules in paragraphs (c)(13)(i) and (ii) of this section:

    Example 1.  N, an individual, purchases regulated futures 
contracts at a cost of $7,500 and $5,000, respectively, through two 
different branches of Commodities Broker X on the same day. N pays 
for each purchase with currency. Each branch of Commodities Broker X 
transmits the sales information regarding each of N's purchases to a 
central unit of Commodities Broker X (which settles the transactions 
against N's account). Under paragraph (c)(13)(ii) of this section 
the separate branches of Commodities Broker X are not deemed to be 
separate recipients; therefore, Commodities Broker X must report 
with respect to the two related regulated futures contracts sales in 
accordance with this section.
    Example 2.  P, a corporation, owns and operates a racetrack. P's 
racetrack contains 100 betting windows at which pari-mutuel wagers 
may be made. R, an individual, places currency wagers of $3,000 each 
at five separate betting windows. Assuming that in the ordinary 
course of business each betting window (or a central unit linking 
windows) does not have reason to know the identity of persons making 
wagers at other betting windows, each betting window would be deemed 
to be a separate currency recipient under paragraph (c)(13)(i) of 
this section. As no individual recipient received currency in excess 
of $10,000, no report need be made by P under this section.

    (d) Exceptions to the reporting requirements of 31 U.S.C. 5331--(1) 
Receipt of currency by certain casinos having gross annual gaming 
revenue in excess of $1,000,000--(i) In general. If a casino receives 
currency in excess of $10,000 and is required to report the receipt of 
such currency directly to the Treasury Department under Secs. 103.22 
(a)(2) and 103.25 and is subject to the recordkeeping requirements of 
Sec. 103.36, then the casino is not required to make a report with 
respect to the receipt of such currency under 31 U.S.C. 5331 and this 
section.
    (ii) Casinos exempt under Sec. 103.55(c). Pursuant to Sec. 103.55, 
the Secretary may exempt from the reporting and recordkeeping 
requirements under Secs. 103.22, 103.25 and 103.36 casinos in

[[Page 67684]]

any state whose regulatory system substantially meets the reporting and 
recordkeeping requirements of this part. Such casinos shall not be 
required to report receipt of currency under 31 U.S.C. 5331 and this 
section.
    (iii) Reporting of currency received in a nongaming business. 
Nongaming businesses (such as shops, restaurants, entertainment, and 
hotels) at casino hotels and resorts are separate trades or businesses 
in which the receipt of currency in excess of $10,000 is reportable 
under section 5331 and these regulations. Thus, a casino exempt under 
paragraph (d)(1)(i) or (ii) of this section must report with respect to 
currency in excess of $10,000 received in its nongaming businesses.
    (iv) Example. The following example illustrates the application of 
the rules in paragraphs (d)(2) (i) and (iii) of this section:

    Example. A and B are casinos having gross annual gaming revenue 
in excess of $1,000,000. C is a casino with gross annual gaming 
revenue of less than $1,000,000. Casino A receives $15,000 in 
currency from a customer with respect to a gaming transaction which 
the casino reports to the Treasury Department under 
Secs. 103.22(a)(2) and 103.25. Casino B receives $15,000 in currency 
from a customer in payment for accommodations provided to that 
customer at Casino B's hotel. Casino C receives $15,000 in currency 
from a customer with respect to a gaming transaction. Casino A is 
not required to report the transaction under 31 U.S.C. 5331 or this 
section because the exception for certain casinos provided in 
paragraph (d)(1)(i) of this section (``the casino exception'') 
applies. Casino B is required to report under 31 U.S.C. 5331 and 
this section because the casino exception does not apply to the 
receipt of currency from a nongaming activity. Casino C is required 
to report under 31 U.S.C. 5331 and this section because the casino 
exception does not apply to casinos having gross annual gaming 
revenue of $1,000,000 or less which do not have to report to the 
Treasury Department under Secs. 103.22(a)(2) and 103.25.

    (2) Receipt of currency not in the course of the recipient's trade 
or business. The receipt of currency in excess of $10,000 by a person 
other than in the course of the person's trade or business is not 
reportable under 31 U.S.C. 5331. Thus, for example, F, an individual in 
the trade or business of selling real estate, sells a motorboat for 
$12,000, the purchase price of which is paid in currency. F did not use 
the motorboat in any trade or business in which F was engaged. F is not 
required to report under 31 U.S.C. 5331 or this section because the 
exception provided in this paragraph (d)(2) applies.
    (3) Receipt is made with respect to a foreign currency 
transaction--(i) In general. Generally, there is no requirement to 
report with respect to a currency transaction if the entire transaction 
occurs outside the United States (the fifty states and the District of 
Columbia). An entire transaction consists of both the transaction as 
defined in paragraph (c)(12)(i) of this section and the receipt of 
currency by the recipient. If, however, any part of an entire 
transaction occurs in the Commonwealth of Puerto Rico or a possession 
or territory of the United States and the recipient of currency in that 
transaction is subject to the general jurisdiction of the Internal 
Revenue Service under title 26 of the United States Code, the recipient 
is required to report the transaction under this section.
    (ii) Example. The following example illustrates the application of 
the rules in paragraph (d)(3)(i) of this section:

    Example. W, an individual engaged in the trade or business of 
selling aircraft, reaches an agreement to sell an airplane to a U.S. 
citizen living in Mexico. The agreement, no portion of which is 
formulated in the United States, calls for a purchase price of 
$125,000 and requires delivery of and payment for the airplane to be 
made in Mexico. Upon delivery of the airplane in Mexico, W receives 
$125,000 in currency. W is not required to report under 31 U.S.C. 
5331 or this section because the exception provided in paragraph 
(d)(3)(i) of this section (``foreign transaction exception'') 
applies. If, however, any part of the agreement to sell had been 
formulated in the United States, the foreign transaction exception 
would not apply and W would be required to report the receipt of 
currency under 31 U.S.C. 5331 and this section.

    (e) Time, manner, and form of reporting--(1) In general. The 
reports required by paragraph (a) of this section must be made by 
filing a Form 8300, as specified in 26 CFR 1.6050I-1(e)(2). The reports 
must be filed at the time and in the manner specified in 26 CFR 
1.6050I-1(e)(1) and (3) respectively.
    (2) Verification. A person making a report of information under 
this section must verify the identity of the person from whom the 
reportable currency is received. Verification of the identity of a 
person who purports to be an alien must be made by examination of such 
person's passport, alien identification card, or other official 
document evidencing nationality or residence. Verification of the 
identity of any other person may be made by examination of a document 
normally acceptable as a means of identification when cashing or 
accepting checks (for example, a driver's license or a credit card). In 
addition, a report will be considered incomplete if the person required 
to make a report knows (or has reason to know) that an agent is 
conducting the transaction for a principal, and the return does not 
identify both the principal and the agent.
    (3) Retention of reports. A person required to make a report under 
this section must keep a copy of each report filed for five years from 
the date of filing.

    Dated: December 20, 2001.
James F. Sloan,
Director, Financial Crimes Enforcement Network.
[FR Doc. 01-31846 Filed 12-28-01; 8:45 am]
BILLING CODE 4820-03-P